OYO to Become a Public Limited Company Ahead of IPO

Low-cost hospitality firm Oyo has taken one more step towards its proposed IPO later this year. During the week, Oravel – the parent company of Oyo Rooms, announced that the registrar of companies (ROC) had approved the conversion of Oravel from a private limited company to public limited company. Accordingly, its name will also stand changed from Oravel Stays Private Limited to Oravel Stays Limited.

Conversion of a private limited company into a public limited company is mandatory for the company to invite the public to subscribe to their shares via an IPO. Clearly, this step appears to be a preparatory step ahead of the forthcoming IPO of the travel and leisure company. A private limited company cannot have more than 50 share owners and hence before any public issue, it is essential to convert to public limited company.

Apart from converting into a public limited company and changing its name, Oravel Stays has approved increase in authorized capital from Rs.1.17 crore to Rs.901 crore. OYO is expected to file its draft red herring prospectus (DRHP) for the IPO in the last week of November and the issue is expected in the first quarter of calendar 2022. The company is in talks with JP Morgan, Citi and Kotak Mahindra Capital for lead managing the issue.

While the actual size of the IPO is not known, the markets are expecting an IPO size of around Rs.11,000 crore. The issue will be a combination of fresh issue and an offer-for-sale by some of early investors in the company. Oyo will be targeting a valuation in the range of $14-16 billion, positioning itself among the premium unicorns in India, like Paytm and Byju’s in terms of valuations.

Many digital platforms have been enthused to raise funds in the Indian market after the successful digital issues of Zomato and CarTrade. A host of other digital plays are already lined for raising funds through the IPO route.

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